Unilateral Contracts
A unilateral contract is an agreement in which the offeror promises to pay or perform only after the offeree completes a specified act. The offeree is not obligated to perform; the offer becomes binding on the offeror only when the requested performance is completed.
Key takeaways
- Only the offeror is initially bound; the offeree becomes protected only after performance.
- Acceptance occurs by performing the requested act, not by a promise to perform.
- Common examples: reward offers, certain insurance policies, and one-off service requests.
- To be enforceable, the contract must include a clear offer, lawful consideration, mutual intention to create legal relations, and certainty about the required performance.
- Offers can usually be revoked before performance begins, unless the law or circumstances create an option or promissory estoppel.
How unilateral contracts operate
- Offer: One party makes a promise conditioned on another party’s performance (e.g., “$500 to anyone who returns my lost dog”).
- Acceptance by performance: The offeree accepts by completing the act specified in the offer.
- Enforcement: Once performance is completed (or in some jurisdictions, once performance has begun), the offeror must fulfill the promise. Disputes arise when terms are unclear or performance is disputed.
Common types and examples
- Rewards and open requests: Public promises to pay for information, lost property, or other acts (e.g., rewards for finding a missing pet).
- Labor or service tasks: One-time offers to pay someone to do a specific job (e.g., mowing a lawn, walking a dog).
- Insurance contracts: Insurers promise to pay upon the occurrence of specified events, conditioned on covered terms and, typically, the insured’s payment of premiums.
Essential legal elements
A unilateral contract typically requires:
* Offer: A clear, definite promise by the offeror.
* Acceptance through performance: The offeree accepts by completing the requested act.
* Consideration: Something of value (not necessarily money) exchanged for the promise.
* Intention to create legal relations: Both parties understand the offer is legally binding.
* Certainty: The terms and conditions for completion must be sufficiently clear.
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Unilateral vs. bilateral contracts
- Unilateral contract: Only the offeror is initially obligated; the offeree has no duty to act. Acceptance is by performance.
- Bilateral contract: Both parties exchange mutual promises and are immediately bound; acceptance is usually by a promise to perform.
Revocation and mistakes
- Revocation: An offeror generally may revoke a unilateral offer before the offeree begins performance. Some jurisdictions limit revocation once performance has commenced or where the offeree has relied on the offer (promissory estoppel).
- Mistakes and remedies: If a mistake affects clarity or fairness, courts may reform the contract, allow rescission, or provide other equitable remedies depending on the circumstances.
Practical tips
- Make offers clear and specific about what constitutes acceptable performance.
- If you’re the offeree and intend to rely on an offer, begin performance promptly and document it.
- If you’re the offeror and want the offer to remain open, consider creating an option or expressly promising not to revoke for a stated period.
Conclusion
Unilateral contracts are useful when one party wants to motivate performance without requiring a reciprocal promise. They are common in rewards, certain insurance arrangements, and single-task service offers. Clarity in the offer’s terms and awareness of revocation and reliance rules determine whether and when a unilateral promise becomes legally enforceable.